Fort Belknap Electric Cooperative Inc

“The cooperative was formed by the members to provide electric service at cost on a cooperative basis.”

“The members of the cooperative vote on the board of directors. Elections are done on a one member one vote basis.”

“The following acts require approval of the members of the cooperative: 1. Dissolution/liquidation of the cooperative 2. Merger or consolidation of the cooperative with another organization 3. Disposal of a substantial portion of the cooperative's assets 4. Amendment to the articles of incorporation”

“The cooperative has no committees with authority to act on behalf of the governing body. Therefore, and pursuant to form 990 instructions, the question has been answered "no".”

“Management presented a copy of the form 990 to the board for discussion and review prior to filing.”

“On an annual basis, the cooperative requries its employees to attend a meeting to discuss the conflict of interests policy and any potential conflicts.”

“The board of directors perform an annual review and utilize internal resources when determining the compensation of the general manager. Other than the general manager, the cooperative did not have any employees meeting the definition of officer or key employee. Therefore, and pursuant to form 990 instructions, line 15b has been answered "no".”

“All new members of the cooperative are mailed a copy of the cooperative's bylaws. The cooperative also provides a complete copy of its governing documents, conflict of interest policy and audited financial statements to any member who requests a copy of any such document. Annually the cooperative mails a condensed summary of the balance sheet and income statement to the members of the cooperative with the annual meeting notice. Additionally, a copy of the bylaws can be found on the cooperative's website.”

“In order to provide retirement benefits to its employees, the cooperative has established a defined contribution plan under section 401(k) of the internal revenue code. The cooperative contributes based on a percentage of participating employee's compensation as determined under the plan document. Additionally, the cooperative participates in a multi-employer defined benefit plan. Contributions to this plan are based on the full funding limitation of such plan. Employer contributions for both plans are available to participating employees, including officers, meeting the eligibility requirements of such plans. The cooperative also provides health and life insurance to eligible employees through a qualified plan. The amounts reported on part vii, column (f) for the officer is comprised of the actuarial increase in the defined benefit plan for the officer, the total contributions to the 401(k) pension plan and insurance premiums paid for his benefit.”

“The board of directors consider the general manager to be both the top management official and the top financial official. Therefore, only the general manager is listed as an employee officer.”

“Patronage dividends result from the purchase of wholesale power from a generation & transmission cooperative. Patronage dividends also result from the payment of interest from cooperative banks and the purchase of supplies and services from other cooperative organizations. The expenses associated with purchases from and payments to such cooperative organizations are a direct component of cost of the electric service provided by the cooperative to its members.”

“Although the cooperative is no longer an rus borrower, its accounting records are maintained in accordance with the rural utilities service (rus) uniform system of accounts (usoa) prescribed for rus electric borrowers. The usoa does not record expenses in the general expense categories provided on part ix lines 1-23. The cooperative separately reports salaries and wages, employee benefits and payroll taxes that are allocated in accordance with their accounting system, but other expenses that are described in lines 1-23 are reported on line 24 under the expense categories required by the usoa.”

“Salaries and wages are allocated to asset, liability, and expense accounts based on the accounting system described above. The following schedule reconciles amounts reported on lines 5-7 to the total wages accrued and/or paid: total per lines 5-7 $ 1,697,376 less: director fees reported on forms 1099-nec (227,579) less: employee officer benefits reported on line 5 (75,317) plus: salaries & wages allocated to power 2,859 plus: salaries & wages capitalized directly to plant 375,485 plus: salaries & wages capitaliized/expensed indirectly through clearing & other accounts 156,408 total wages accrued and/or paid $ 1,929,232”

“Administrative & general expense is comprised of the following: administrative & general salaries, benefits, & other $ 372,113 office supplies 51,530 outside services 218,365 employee training 123,978 directors 245,662 association dues 31,204 miscellaneous general 60,745 annual meeting 20,807 regulatory commission 27,933 maintenance of general plant 20,664 total admin & general expense per financial statements $ 1,173,001 less: reclass of director fees to part ix, line 5 (227,579) less: reclass of labor to part ix, lines 5 & 7 (303,120) less: reclass of benefits to part ix, lines 8-10 (139,403) total admin & general expense per form 990, part ix $ 502,899”

“Pursuant to the form 990 instructions, the amount of patronage dividends paid to the members (hereinafter referred to as "patrons") should be reported on part ix, line 4. The phrase "patronage dividends paid" refers to the process, subsequent to year-end, by which the cooperative allocates patronage capital to and, therefore, operates at cost with its patrons. The cooperative's tax exempt purpose is to provide electricity to its patrons and to do so on a cooperative basis. Tax law defines "operating on a cooperative basis" as subordination of capital, democratic control, and operation at cost. The cooperative operates at cost through the allocation of true patronage dividends (also referred to as allocations of patronage capital) to its patrons. Patronage dividends are considered paid if the allocation is made (1) pursuant to a pre-existing obligation, (2) from the margins produced from the transactions done with or for patrons, and (3) in a fair and equitable manner on the basis of patronage (i.e. Purchases). Additionally, the allocation of patronage dividends should be made within a reasonable time period after the close of the cooperative's year-end of december 31. Each one of these requirements for a true patronage dividend is provided for in the non-profit operation article of the bylaws. The amount reported on part ix, line 4 represents the amount of patronage capital that is either allocated or to be allocated to the patrons resulting from their purchase of electricity from the cooperative for the 2024 calendar year. Because patronage dividends are the process by which the cooperative operates at cost with its patrons and thereby a key component to accomplishing its exempt purpose, the cooperative has reported such amounts as an expense for form 990 reporting. Patronage dividends are not an expense for financial statements prepared in accordance with generally accepted accounting principles, however.”

“All grants, sponsorships, and/or donations are made to non-profit and civic organizations that are located in the cooperative's service area, and are intended to improve the communities in which our members reside. Each grant, sponsorship, and/or donation made during the year was below the reporting threshold of schedule i, part ii.”

“Patronage capital allocated or to be allocated 428,488. Patronage capital retired - total patronage capital retired - discount net change in memberships -225. Equity method income from subsidiary 251,005. Donated capital 2.”

“The board as a whole is responsible for overseeing the financial statement audit and selecting the independent auditor. Procedural changes did not occur during the year.”